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Kingfisher Q1 sales drop by 0.4% (-4.2% LFL)

Kingfisher reports Q1 total sales down 0.4% (-4.2% LFL) and retail profit of £114 million. Sales improved at the end of the quarter following a return to more normal weather patterns.

Highlights in constant currencies:

Sales and profit impacted by:
- On-going weak consumer confidence in our three major markets
- Unfavourable cold weather through March and early April which impacted footfall, with sales of outdoor products down 10%
- Re-investment of self-help margin and cost benefits in affordability continued in Q1. This re-investment rate is expected to ease for the balance of the year
- Progress continued with “Creating the Leader” including the acquisition in the quarter of 15 stores in Romania, due to complete in Q2.
- Net cash was £264 million (28 April 2012: reported net cash of £165 million)

Kingfisher UK & Ireland:
Total sales declined by 3.4% to £1,068 million (-4.7% LFL) in a slow market impacted by weak consumer confidence and an early Easter coupled with record cold weather, through March and early April.

Reflecting the weaker sales, Kingfisher UK & Ireland reported retail profit of £50 million (2012/13: £74 million reported retail profit including the benefit of a one-off construction related claim for around £5 million). Gross margins were broadly flat, with the benefits from on-going self-help initiatives offset by investment in pricing. A strong focus on operating cost efficiencies continued across both businesses.

B&Q UK & Ireland’s total sales declined by 5.7% to £913 million (-5.6% LFL) in line with lower footfall driven by the colder temperatures. Sales of outdoor seasonal products, which can represent up to 30% of total Q1 sales, were down over 10%. Sales of building products were also impacted by the cold weather. In the showroom category, bathroom sales were down, in a weak, price-aggressive market. However kitchen sales delivered a solid performance. Sales of indoor decorative products fared better as customers switched some of their home improvement activities indoors.

In Ireland, following the conclusion of the Examinership process, one store has now closed and significant rent reductions will be achieved across the remaining stores.

Screwfix grew total sales by 12.6% (+1.7% LFL) to £155 million, in an improving smaller tradesman market, benefiting from new ranges (e.g. paint and power tool accessories), the continued roll out of new outlets and the successful introduction of a mobile “click, pay & collect” offer last year. Eight outlets were opened during Q1, taking the total to 283.

Ian Cheshire, Group Chief Executive, said:

“Market conditions have remained challenging in the first quarter compounded by the effects of an early Easter and unseasonably cold weather across Europe. As a result, general footfall was down and demand for outdoor maintenance, gardening and leisure products was adversely affected for a second year running. These impacts were particularly acute in March which resulted in that month accounting for the vast majority of the quarter’s profit decline. However, our performance towards the end of the quarter was encouraging following a return to more normal weather patterns.

“Looking ahead, we still have our key summer season to come and we are ready to capitalise on any improvement in conditions during this peak trading period. We will continue to focus hard on our margin and cost initiatives helping us to reinforce our value credentials with customers during these challenging times.

“Our self-help plan, “Creating the Leader”, is progressing well, improving our customer offer whilst optimising the generation and use of cash to deliver shareholder value.”

For the full trading update please visit our Industry Articles pages:

Source : Kingfisher

30 May 2013
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